MARKET REPORT: Cocktail of economic woes takes its toll on Ocado as JP Morgan and HSBC cut target prices and shares fall another 2.5%
Ocado shares fell as analysts sounded the alarm about a cocktail of economic woes.
In a setback for the online supermarket FTSE 100, investment banks JP Morgan and HSBC lowered their target prices for the shares to 400p and 370p respectively.
Shares, which are down nearly a third this year, fell 2.5 percent, or 10.9 pence, to 424 pence.
JP Morgan told customers that “Ocado’s online grocery business will continue to face significant headwinds in the coming months.”
The vote was not helped by HSBC, which said “the clock is ticking” for the blue-chip company amid signs the path to growth is coming under pressure.
Pressured: JP Morgan and HSBC have lowered their target prices for Ocado shares to 400p and 370p respectively
It pointed to Ocado’s announcement in late April that its oldest warehouse will close. The Hatfield branch in Hertfordshire receives about 20 percent of the company’s retail orders, according to HSBC.
The gloomier forecasts from JP Morgan and HSBC contrasted sharply with BNP Paribas Exane, which told clients last week that Ocado’s “outlook and market sentiment are much more aligned.”
The FTSE 100 fell 0.3 percent, or 19.17 points, to 7569.31, and the FTSE 250 fell 0.6 percent, or 108.13 points, to 18746.16.
Officials in Threadneedle Street have been warned that Britain will slide into recession if interest rates are raised to 6 per cent.
Richard Hunter, head of markets at Interactive Investor, said: “The bank is between a rock and a hard place, with marginal growth offset by continued inflation and widespread wage increases, which are themselves inflationary.”
Traders rushed to car dealerships on the back of Lookers, encouraging the shareholder to accept an offer of 120p per share from Canada’s Alpha Auto Group. Viewers jumped 33.9 percent, or 30.1p, to 118.8p, Pendragon gained 5.3 percent, or 0.84p, to 16.74p, and Vertu Motors added 8.9 percent, or 5.6p, to 68 ,4p.
WPP’s takeover wave showed little sign of slowing down after it acquired a 30 percent stake in a US-based creative agency.
CEO Mark Read said the ad giant is impressed by the “vision, market positioning and trajectory” of Majority, which was founded two years ago by Omid Farhang and retired American basketball star Shaquille O’Neal.
WPP shares fell 0.6 percent, or 4.8p, to 858.4p. There was good news for investors in Rolls-Royce after the jet engine manufacturer’s boss said the company was making progress with its turnaround plan.
Tufan Erginbilgic, who took over from Warren East early this year, told the Paris Air Show the group could return to the narrow body market if the right opportunity presented itself.
Rolls-Royce’s CEO had previously described the company as a “burning platform” in need of streamlining. Shares rose 2.1 percent, or 3.2 pence, to 157 pence.
S Three shifted the focus from permanent employees to contract workers. The group, which specializes in science, technology, engineering and maths positions, saw fees from its regular activities fall 19 percent to £38.6 million in the six months to the end of May.
That coincided with a 3 percent increase in contract division revenue, which accounts for more than 80 percent of group fees.
Shares fell 1 percent, or 3.5 pence, to 363.5 pence yesterday.
Tekcapital – which invests in university-developed discoveries – held steady at 13 pence, despite one of its investments yielding a deal to make Bluetooth audio glasses for Reebok.
Innovative Eyewear is teaming up with New York-based Authentic Brands Group to create an eyewear collection for the American sports giant that should make its debut early next year.